U.S. consumers faced record-high gasoline prices entering the Labor Day weekend, with the national average for regular gas reaching $4.14 per gallon. This figure is nearly a dollar higher than the previous year and exceeds the prior Labor Day record of $3.82 set in 2012, according to AAA. The elevated prices have led some families, like Nicole Collins' from Philadelphia, to curtail summer travel and remain closer to home.
Experts attribute the surge primarily to geopolitical tensions stemming from U.S. and Israeli actions against Iran in February. Crude oil shipments through the critical Strait of Hormuz have decreased significantly since Iran has refused to reopen the waterway. "Everything points to the Iran War and the Strait of Hormuz," said Tom Seng, a professor of energy finance at Texas Christian University.
Energy Secretary Chris Wright acknowledged the current high prices, noting they are also elevated compared to the previous year. "Yes, they’re higher today, but we’re doing everything we can to push them down," Wright stated Sunday on ABC’s “This Week.” While the national average remains below the all-time high of $5.02 per gallon recorded in June 2022, diesel fuel has set a new record, averaging $5.85 per gallon on Friday.
The increased cost of diesel impacts freight transportation, with these higher logistics expenses anticipated to be passed on to consumers through various goods and services. "It doesn’t really seem like there’s an end to it," Collins remarked.
Traditionally, gasoline prices decline after the summer driving season as refineries transition to producing a winter blend. However, this year presents additional challenges. U.S. refineries are operating at approximately 98% capacity, with some experiencing strain due to unusually hot weather, particularly in Texas. Disruptions at refineries due to weather or other issues could impede price decreases. "There’s just less gasoline coming out of those refineries," said Matthew Metzgar, a clinical professor of economics at UNC Charlotte, also citing reduced output from Chinese refiners and Ukrainian drone attacks on Russian refineries as factors affecting diesel supplies.
Secretary Wright indicated that the administration is pursuing measures to boost production, and market futures suggest a potential decrease in prices in the coming months. "If you look at the futures prices, if you wanted to buy today in bulk gasoline for two months out in November, it’s about $0.35 cheaper than it is today. So the marketplace thinks gasoline prices are going to move meaningfully lower," he said.
While geopolitical factors are largely beyond a driver's control, utilizing gas price comparison applications can offer minor savings, especially on longer trips where prices can vary significantly between stations. Metzgar noted that stations near interstates might charge 10 to 15 cents more per gallon than those a short distance away.